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What's in a Name? : Whole Foods Market Gains in Sales After Initially Offending the Mrs.

May 23, 1997|GEORGE WHITE | TIMES STAFF WRITER

Nearly four years after violating one of the cardinal rules of supermarket consolidation, Whole Foods Market--formerly known as Mrs. Gooch's Whole Foods Markets--appears to be gaining sales in Southern California.

Austin, Texas-based Whole Foods erred by retaining the Mrs. Gooch's name after it acquired the Southern California natural foods chain in September 1993, industry analysts say.

After it began stocking beer, white flour and other mainstream products that natural food purists avoid, Whole Foods lost some longtime Mrs. Gooch's customers and failed to attract enough new mainstream shoppers, said Jonathan Ziegler, an analyst at Salomon Bros.

"If you remake the store, you should change the name," Ziegler said.

Like Mrs. Gooch's, Whole Foods also offers organically grown produce, herbal products and nutritional supplements. However, Whole Foods' broader marketing approach did not mesh with Mrs. Gooch's narrower niche merchandising, said Richard Cundiff, president of Whole Foods' Southern California operations.

The chain was renamed Whole Foods Market in July and the company has been remodeling many of its 11 Southland stores.

The strategy appears to be working. The company's Southland sales declines were growing in the months before the name change. The trend has now reversed. The sales decline was only 5% in the second quarter--a 12-week period ended April 13--compared with a 9% decline in the previous period. Sales in the current quarter are up 1% thus far.

The turnaround at Whole Foods comes as three other recently merged chains make their own consolidation adjustments. While Ralphs, Vons and Hughes are no longer independent, they are still operated under those well-known names.

Like Whole Foods, Compton-based Ralphs is beginning to see improvement in same-store sales--revenue from stores open at least 12 months. Sales rose 1.8% at the company's 405 stores in California and Kansas during the fiscal year ended Feb. 2. However, sales rose 3.5% at the company's 342 Ralphs and Food 4 Less stores in Southern California during the final quarter of that year. The company has been trying to boost sales, cut costs and consolidate operations since Los Angeles-based Yucaipa Cos. acquired Ralphs in June 1995. Yucaipa controlled the Alpha Beta, Boys and Viva chains that were converted into Ralphs or Food 4 Less stores.

The company also has consolidated warehouse and distribution operations and closed some under-performing stores, expenses that contributed to its $283.2-million loss for its most recent fiscal year. Company executives now expect the firm to generate a profit during its final quarter this year.

Few transition problems are expected at Hughes Family Markets, which was acquired by Bellevue, Wash.-based Quality Food Centers in November.

QFC will not make major management changes at Irwindale-based Hughes and no name change is planned, said Chris Sinclair, president of the QFC holding company that will oversee Hughes' operations.

"Hughes is a healthy business and we're just looking for ways to add more value to the operation," Sinclair said.

Sinclair said QFC would help expand the selection of baked goods, seafood and floral products at Hughes. QFC also aims to add 12 to 22 new stores to the 58-store Hughes chain over the next three years, he said.

Vons, acquired by Pleasanton-based Safeway Inc. in December, is also expected to expand. There are 286 Vons stores and 33 Pavilions stores in the Vons operation.

Companywide, Safeway plans to open 40 to 50 stores this year. Some new sites will be Vons, but Safeway isn't disclosing specifics.

The venerable Vons name will remain, but the Safeway name will appear on private-label products in Vons stores in the coming weeks. Vons began to introduce Safeway Select soft drinks this month and will add Safeway Select pasta and other products in the months ahead.

George White can be reached via e-mail at george.white@latimes.com or by fax at (213) 237-7837.

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